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Update on Claim against Kingdom of Thailand

Representatives of Kingsgate Consolidated Limited (ASX:KCN) (“Kingsgate” or the “Company”) have met with representatives of the Royal Thai Government to discuss a possible settlement of the Company’s claims against the Kingdom of Thailand under the Australia-Thailand Free Trade Agreement (“TAFTA”).

Shortly before the meeting, the Company was informed that the Thai Government had lifted the “temporary suspension” of the Chatree Mine, which is operated by the Company’s subsidiary, Akara Resources Public Company Limited (“Akara”). Further, Kingsgate was advised that Akara’s application for renewal of its Metallurgical Processing Licence, which expired on 31 December 2016, could now be processed.

However, it subsequently became clear that the Thai Government would not be offering any monetary compensation for the substantial losses that Kingsgate has already suffered as a result of the unlawful closure and expropriation of the Chatree Mine, nor for the substantial expenses that would be incurred in connection with restarting operations at Chatree (if an appropriate framework for doing so was able to be agreed with the Thai Government).

Nevertheless, Kingsgate was informed that the Thai Government may be willing to provide other meaningful benefits in consideration of the shut-down of the Chatree Mine.

In light of the foregoing, the Kingsgate board has determined that it is in the interests of the Company to further explore this matter, together with a number of other unresolved issues.

Accordingly, Kingsgate has reserved its legal position under TAFTA and allowed a further limited period of dialogue with the Thai Government.

Quarterly Report for the period ending 30 June 2017

Significant Matters

CHILE

Kingsgate continues to progress its 100%?owned Nueva Esperanza Gold?Silver Project in Chile, with work continuing on a seasonal exploration program as well as permitting and feasibility related activities.

A total of 11,398 metres (57 holes) of Reverse Circulation (“RC”) drilling for exploration, and 1,830 metres (10 holes) of diamond drilling for exploration and metallurgical sampling has been completed at Nueva Esperanza during the field season that commenced at the beginning of September 2016.

During calendar 2017, there have been encouraging drill intercepts from the Huantajaya, Carachitas and more recently the new Cerro Blanco West exploration targets. (See ASX:KCN releases titled “Chile ? Drill Results from District Exploration” dated 27 February 2017, and “New Silver Discovery at Nueva Esperanza, Chile” dated 17 July 2017).

The environmental impact submission (“DIA”) for Nueva Esperanza was submitted to Chilean regulatory agencies on 5 July 2017. (The DIA is essentially a process to amend the existing permit footprint and incorporate a dry?stacked tailing design.)

Kingsgate was also pleased to appoint Ausenco to complete the detailed engineering and technical components for the Nueva Esperanza Project Feasibility Study in Chile during the June quarter.

The Ausenco appointment comes after a rigorous selection process that considered economic, technical, and other key project related criteria. The work is scheduled for completion in January 2018.

THAILAND

On 3 April 2017, Kingsgate advised that it will be seeking a range of remedies, including compensation, from the Government of Thailand for the measures taken against the Chatree Gold Mine in violation of the Thai?Australia Free Trade Agreement (“TAFTA”).

As a first step, Kingsgate notified the Prime Minister of Thailand that it wishes to engage in consultations as required under TAFTA.

A consultations meeting between Kingsgate and representatives from the Thai Government took place on 27 June in Bangkok and Kingsgate agreed to extend the consultations period to 27 July.

While the consultations period has now ended, Kingsgate intends to meet further with the Thai Government in mid?August. Any such meeting will be without prejudice to the Company’s position under TAFTA.

Kingsgate and the Thai Government commenced this process in good faith, but if at any point in the future Kingsgate considers that a mutual outcome is not able to be reached, Kingsgate is free to commence international arbitration proceedings.

FINANCIAL

Kingsgate is well funded to meet its planned calendar 2017 expenditures in Chile and Thailand.

New Silver Discovery at Nueva Esperanza, Chile

Kingsgate Consolidated (ASX:KCN) (“Kingsgate” or the “Company) has discovered a new zone of silver mineralisation (“Cerro Blanco West”) as a result of exploration drilling at its 100% owned Nueva Esperanza precious metals project in Chile. Nueva Esperanza is a feasibility-stage development project with a resource base of approximately 1.9 million ounces gold equivalent1.

Eight Reverse Circulation (“RC”) holes (See Figure 2) totalling 1,226 metres were completed on the new Cerro Blanco West target prior to drilling being halted by the early onset of winter conditions.
Initial drilling returned the following intercepts:

Update on claim against the Kingdom of Thailand

As announced on 3 April 2017, Kingsgate Consolidated Limited (ASX:KCN) (Kingsgate or the Company) and the Thai Government are required to engage in consultations under the Thailand – Australia Free Trade Agreement for a period of three months, expiring on 2 July 2017, to attempt to resolve the dispute over the closure of the Chatree Gold Mine.
The Company met with representatives of the Thai Government in Bangkok on 27 June 2017.
At the request of the Thai Government, Kingsgate has agreed to an extension of the period for consultations until 27 July 2017.

Ausenco Awarded Nueva Esperanza Feasibility Study

Kingsgate Consolidated (ASX:KCN) (“Kingsgate”) has today appointed Ausenco to complete the detailed engineering and technical components for the Nueva Esperanza Project Feasibility Study in Chile.
The Ausenco appointment comes after a rigorous selection process that considered economic, technical, and other key project related criteria. The work is scheduled for completion in January 2018.
Strategically, the Feasibility Study along with concurrent permitting is a key step in de-risking and adding value to the project.
Kingsgate’s Executive Chairman, Ross Smyth-Kirk, said “We are delighted to be in partnership with Ausenco to complete the Nueva Esperanza Feasibility Study, having successfully worked with them in the past. Their knowledge and experience in this area will make a valuable contribution to this highly prospective project.”